Unit 6 Vocabulary
Section 6.1 Vocabulary
Investments
The purchase of an asset with the purpose of resale and profit.
i.e. - Stocks, Mutual Funds, ETF's
How far are you in your understanding? I can:
1.0: Write a factual statement (not definition) concerning
2.0: In your own words (not the teacher's), define
3.0: What is the reason that investing is a major part of a proper money management?
4.0: Name 3 things that are not stocks or bonds that you could invest in. Which one is the riskiest and which one is the safest? Explain your reasoning.
Rule of 72:
An estimation of how long it will take an investment to double.
How far are you in your understanding? I can:
1.0: Write a factual statement (not definition) concerning
2.0: In your own words (not the teacher's), define
3.0: How long would it take a bond with a 5% interest rate to double?
4.0: Using actual mathematics, prove or disprove that the rule of 72 works for how long it will take an investment to lose half of its value.
Anti-fragile (adj) / Antifragility (n):
To increase one's ability from stressors.
i.e. - Throw your phone on the ground and it upgrades to the newest version or duplicates itself into additional better phones.
Depreciation:
Loss of value of an asset over time.
i.e. -
How far are you in your understanding? I can:
1.0: Write a factual statement (not definition) concerning
2.0: In your own words (not the teacher's), define
3.0: What are two assets (one that belongs to you and one that belongs to your family) that do not depreciate?
4.0: Name 5 depreciating items that you depend on (other than food or water). Guestimate how much money each of those could put back in your pocket if you decided to never buy new. Circle 3 and write a statement to yourself about why you are willing to ask yourself to practice thrift with those.
Net Worth:
Assets minus Liabilities= Net Worth
i.e. -
https://www.youtube.com/watch?v=vuNC3QiSC1g
How far are you in your understanding? I can:
1.0: Write a factual statement (not definition) concerning
2.0: In your own words (not the teacher's), define
3.0: What type of expenses are examples (3+) of things that get in the way of increasing one's net worth?
4.0: Find (Research) the "Ideal Number" in relation to Net Worth. (Clue: it's another math equation.) Use your personal information in the Ideal Number equation to determine what your net worth should be right now. Write a sentence about how you are either meeting that goal, or how you will work towards meeting that goal.
Stock Market
A physical or digital location where assets are traded.
i.e. - DAX (Germany), FTSE 100 (London)
How far are you in your understanding? I can:
1.0: Write a factual statement (not definition) concerning
2.0: In your own words (not the teacher's), define
3.0: What are the two main stock markets in the United States?
4.0: Describe 3 differences between a 'typical' market and the stock market.
Stock
An investment in which you share ownership of a public company.
i.e. - SNE (Sony), MSFT (Microsoft), AMZN (Amazon)
How far are you in your understanding? I can:
1.0: Write a factual statement (not definition) concerning
2.0: In your own words (not the teacher's), define
3.0: What are two things the value of a stock is based on?
4.0: **NONE**
Rate of Return:
The profit gained on investment, over time, as compared to the principle.
i.e. -
How far are you in your understanding? I can:
1.0: Write a factual statement (not definition) concerning
2.0: In your own words (not the teacher's), define
3.0: What is the RoR if you invested $460, and after fees, received $416 when you sold your investment?
4.0: **NONE**
Section 6.2
Volatility:
The fluctuation (changing) of the value of an investment.
i.e. -
How far are you in your understanding? I can:
1.0: Write a factual statement (not definition) concerning
2.0: In your own words (not the teacher's), define
3.0: What human trait is a large cause of volatility?
4.0: Read this article on Beta. (Note the end results/returns for each investment.) Using the stocks you have invested in at MarketWatch.com, identify the Beta for each of your investments. What does that number mean? Build your own definition of Beta using middle school language.
Bond
A loan to an organization that pays a set interest rate until repayment occurs.
i.e. - SLQD (iShares 0-5 Year Invmt Grd Corp Bd)
VIDEO: https://www.youtube.com/watch?v=-0HQltcbglw
and https://www.youtube.com/watch?v=IuyejHOGCro
How far are you in your understanding? I can:
1.0: Write a factual statement (not definition) concerning
2.0: In your own words (not the teacher's), define
3.0: According to Google, which US Savings Bond has the best interest rate? (And what is that interest rate?)
4.0: Walk me through the process (give instructions) on how to purchase US Savings Bond Series EE.
Mutual Fund
A collection of assets purchased with a single cost that is professionally managed.
VIDEO: https://www.youtube.com/watch?v=ngfKXvfzC74
How far are you in your understanding? I can:
1.0: Write a factual statement (not definition) concerning
2.0: In your own words (not the teacher's), define
3.0: Do you think mutual funds will become more or less popular moving into the future? Give a reason why.
4.0: Research "Index Funds." Give 3 bullet points of how they are similar and 3 bullet points on how they are different when compared to Mutual Funds.
ETF (Exchange Traded Fund)
A collection of assets purchased with a single cost that is electronically managed.
i.e. - IUSG (iShares Core Russell US Growth)
How far are you in your understanding? I can:
1.0: Write a factual statement (not definition) concerning
2.0: In your own words (not the teacher's), define
3.0: Why would a consumer choose an ETF instead of a stock?
4.0: Research/locate 3 ETF's that has no commissions or fees that don't have a minimum investment requirement. Look into your 3 ETF's and determine which one you would prefer to invest in. Provide 2 well-thought-out sentences that explain your answer.
TVOM: (Time Value Of Money)
The power of your money now is greater than the same money in the future.
i.e. -
How far are you in your understanding? I can:
1.0: Write a factual statement (not definition) concerning
2.0: In your own words (not the teacher's), define
3.0: Which steps of proper money management fall victim to the effects of TVOM?
4.0: When it comes to investing, what do TVOM and DCA both agree on?
DCA: (Dollar Cost Averaging)
A continuous investment over an extended period of time that removes the volatility of the market.
i.e. -
How far are you in your understanding? I can:
1.0: Write a factual statement (not definition) concerning
2.0: In your own words (not the teacher's), define
3.0: When considering one's income, what type of income does using Dollar Cost Averaging best fit? Provide your reasoning.
4.0: **NONE** (Technically included in TVOM's 4.0)